The biggest loser in the 2016 presidential election in the United States was neither Hillary Clinton nor the Democratic Party. It was free trade.
Both president-elect Donald Trump and Clinton, the Democratic Party nominee, declared their opposition to the Trans-Pacific Partnership during the campaign. It was perhaps the first time since the Great Depression of the 1930s that both the Democratic and Republican presidential candidates embraced a protectionist agenda.
Something is changing deep within American society. There is a growing sense of alienation among many Americans who feel that their interests are no longer represented or protected by the political class. They are concerned that the free flow of foreign goods threaten their jobs, and subject their livelihoods to the harsh vicissitudes of the outside world.
During the presidential campaign, the email accounts of influential members of the Democratic Party were hacked and later made public on the Wikileaks website. One such communication thread (dated Oct. 3) between members of Clinton's inner circle centered on the question of how she should address the TPP issue.
Clinton's campaign debate coach wrote: "She has to be for TPP. ... I think opposing it would be a huge flip-flop. She can say that as president she would work to change it. She can say that it can be better. But I think she should support it." One of Clinton's foreign policy advisors agreed, writing: "I agree with you on TPP but others (including on this email!) feel strongly to the contrary." However, Clinton's campaign manager, Robby Mook, argued that organized labor would never tolerate her endorsement of the TPP, writing: "TPP would be lethal with labor."
In the end, Mook's opinion held sway. During her final debate with Trump, Clinton reiterated: "I oppose the TPP now, I will oppose it after the election, and I'll oppose it as president." Clinton had burned her bridges.
Trump, in his appeals to blue-collar workers who have become disillusioned with the status quo, had harsher words to say about the TPP. On separate occasions he has called it a "horrible deal" and "a disaster ... pushed by special interests who want to rape our country."
Trump's victory sounded the death knell of America's participation in the deal. In a speech outlining the first 100 days in office, Trump declared his intent to withdraw the U.S. from the TPP agreement on day one. He hopes to put "America first" by negotiating bilateral deals that he believes protect the American worker.
Trade stagnation and weakening of the global system of free trade has grave repercussions for Japan.
Japan's fate as a nation is intimately intertwined with the system of free trade. To be sure, Japan's modernization was propelled by a system of free trade, led by Britain prior to World War II and by the U.S. in the postwar period. In other words, during the periods in which Britain or the U.S. supported a system of free trade and an open global economy, Japan developed and prospered through alliances with these countries.
The interwar period shook the free and open world economy to its core. Japan lost its sense of direction: turning its back on free trade, it recklessly advanced on the Eurasian continent instead, adopting an Asian version of the Monroe Doctrine. This led to Japan's self-destruction.
The 1929-1933 Great Depression gave rise to American protectionism and threatened the capitalist model. These developments in the U.S. weakened Japanese liberalism and the liberal foothold within Japan's domestic politics. The collapse of the 1920s Washington system and the liberal diplomacy of Foreign Minister Kijuro Shidehara that it had fostered was closely linked to these convulsions in the system of free trade during the same period.
How exactly does free trade bring about growth and development? By applying external pressure to the domestic arena and prompting structural reforms in domestic industries, free trade can bring about necessary and revitalizing changes to national economies. In the postwar period, Japan participated in almost all multilateral free trade negotiations conducted under the GATT framework. Japan lowered its tariffs and removed nontariff barriers to trade while establishing new rules. In doing so, Japan utilized external pressures (gaiatsu) to concentrate and direct internal pressure (naiatsu) towards structural reforms, linking reform and liberalization as a driving force for change.
No large-scale multilateral free trade agreement has been successfully realized since the conclusion of the Uruguay Round in 1994. Not coincidentally, this period corresponds almost perfectly with Japan's post-bubble "lost era" of more than 20 years.
The march to trade liberalization in the Asia-Pacific region will continue with or without the U.S. By turning its back on free trade, America risks plunging itself and perhaps the rest of the world into a prolonged "lost era" of its own. Eventually, the U.S. will realize that it must re-engage in multilateral agreements, even if it isn't in the form of the TPP.
The American strategist and former World Bank President Robert Zoellick once discussed his experiences as the U.S. Trade Representative with me in the following terms: "I was surprised when the Boeing labor union opposed free trade agreements, because no other company has profited more from world trade than Boeing. High-tech companies also seem to think that free trade has nothing to do with them. During my time as trade representative, no member of Congress representing Silicon Valley ever cast a vote in favor of free trade."
Indeed, the American people are not sufficiently aware of how globalization has benefitted them.
The U.S. government failed to exert the political leadership necessary to preserve and nurture the domestic support base for free trade. A vote for Trump was a vote to defeat free trade.
Protectionism is not only a symptom of the U.S. Key interests groups in Japan such as the powerful farm lobby strongly oppose trade liberalization reform. Prime Minister Shinzo Abe has had an uphill struggle, investing substantial political capital to overcome these domestic challengers. Despite Abe's suggestion that the TPP "has no meaning" without the U.S., Tokyo did not abandon the deal. It was ratified by the Diet this week.
What it does mean, however, is that without the U.S. presence in the TPP, the Regional Comprehensive Economic Partnership (RCEP), a deal driven by Beijing that excludes America, will naturally fill the void. Similarly, the other regional fora, which the U.S. is a member of such as the East Asia Summit and the Asia-Pacific Economic Cooperation forum, will increase in strategic importance. The remaining TPP 11 now have a greater role to play in promoting a liberal rules-based order, and establishing a TPP caucus within the regional initiatives outlined above, should be a part of this.
Yoichi Funabashi is chairman of the Rebuild Japan Initiative Foundation and former editor-in-chief of the Asahi Shimbun. This is a translation of his column in the monthly Bungei Shunju.
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